CSR Research: The Value of Corporate Citizenship

How does firm behavior affect financial performance? Depends on your competitive context

RESEARCH BRIEF - Corporate social responsibility is related to positive financial performance.

Boycotting consumers hold companies responsible for negative events, not themselves

RESEARCH BRIEF - Consumers hold companies accountable negative events and disasters, including environmental disasters, supply chain conditions, and mistreatment of employees.

Corporate citizenship is associated with lower cost of equity

RESEARCH BRIEF - Firms that engage in corporate citizenship activities are more likely to benefit from lower equity costs and therefore are more likely to see higher returns on investment overall.

During product recalls, corporate citizenship may protect shareholder value

RESEARCH BRIEF - In the case of a product recall, firm investments in corporate citizenship are positively associated with shareholder value and can help protect against future recall-associated risk.

Socially responsible investors positively influence portfolio company environmental practices

RESEARCH BRIEF - Firms with higher socially responsible pension-fund investments are more likely to use renewable energy, use environmental criteria in selecting suppliers, and actively communicate their corporate citizenship outcomes.

Long-term investors help improve firm social performance

RESEARCH BRIEF - Investors who take a longer-term view of value creation encourage companies to improve their environmental and social performance.

Acquired firms’ positive CSR performance improves acquiring firms’ stock returns

RESEARCH BRIEF - In mergers and acquisitions, acquiring firms are likely to benefit financially when the acquired firm has strong corporate citizenship performance.

The connection between financial analyst coverage and corporate citizenship performance

RESEARCH BRIEF - Being dropped from coverage by a financial analyst may lead to improved corporate citizenship performance.

When do appointments of corporate sustainability executives affect shareholder value?

RESEARCH BRIEF - Under certain conditions, the appointment of a corporate sustainability executive can positively impact a firm’s financial and operating performance.

Institutional investors lead to improved corporate citizenship performance

RESEARCH BRIEF - Institutional shareholders encourage the adoption of corporate citizenship practices and increased corporate citizenship performance in their portfolio companies by limiting social and environmental risks among their portfolio firms.

Firms may invest in corporate citizenship to insure against short selling—and it can work

RESEARCH BRIEF - When firms are exposed to a heightened risk of being targeted for short selling, corporate citizenship initiatives, especially those that relate to employees and customers may lower the risk of predatory trading that can push prices down.

In times of economic instability, strong corporate citizenship helps mitigate risk and positively impacts stock performance

RESEARCH BRIEF - Stronger corporate social performance helps reduce risk and is linked to more positive stock performance during times of crisis.